What describes the relationship between partnership agreements and tax elections?

The correct choice reflects the nature of how partnerships function when it comes to tax elections. In a partnership, tax elections are made at the entity level rather than by individual partners. This means that the partnership itself, as a collective entity, is responsible for making certain tax decisions that affect how income, deductions, and credits are reported.

For example, a partnership might choose to elect out of the partnership audit rules, or it may decide on its method of accounting. These elections are binding for all partners and cannot be individually altered by any single partner. This framework emphasizes that while partners can have varying interests and stakes in the partnership, the decisions related to the partnership's tax treatment are made collectively by the partnership as a whole.

In contrast, other options suggest misconceptions about the process. The idea that only partners can make tax elections disregards the collective nature of partnerships, while suggesting that both make elections independently implies a lack of unity in decision-making that does not occur in partnership structures. Lastly, stating that tax elections are not covered in partnership agreements overlooks the fact that partnership agreements often address how tax elections will be handled and who has the authority to make these decisions.